Bank failures are often perceived to be more costly to the economy than the failure of other firms of comparable size and to generate widespread public fear. As a result, preventing bank failures is a major public policy concern in all countries. Unfortunately, most public policy strategies...

Losses may accrue to depositors at insolvent banks both at and after the time of official resolution. Losses at resolution occur because of poor closure rules and regulatory forbearance. Losses after resolution occur if depositors'' access to their claims is delayed or ""frozen."" While the...